The fledgling satellite radio market grew a little larger last Thursday when Sirius Satellite Radio launched its consumer audio service in four markets: Houston, Phoenix, Denver and Jackson, Miss.
Sirius joins XM Satellite Radio, which launched the satellite radio category nationally last fall and signed up more than 30,000 subscribers within its first 60 days.
Sirius plans to offer service nationally by the third quarter. Until then, the company will focus its marketing efforts at a grass roots level, rather than launching a national consumer branding campaign, senior vice president of OEM and special markets Doug Wilsterman said.
Wilsterman said that while the Sirius marketing budget for the year is still in flux, it is likely to be upwards of $50 million or $60 million.
To help celebrate its launch, Sirius held a gala event at Jackson consumer electronics retailer Cowboy Maloney's, featuring a live performance by country music star Randy Travis.
DirecTV Inc. also used Cowboy Maloney's to launch retail sales of its direct-broadcast satellite systems back in 1994.
The first subscriber who bought a Sirius radio at Cowboy Maloney's last week won a trip to New York City to see the company's broadcast studio. About 70 people had lined up before the store opened last Thursday, Wilsterman said.
Other Sirius launch promotions included a "Rhythm of the Road Tour" in Phoenix and Jackson, featuring a truck with Sirius listening kiosks that made stops at different retailers.
"We feel strongly that sampling — encouraging consumers to experience satellite radio personally — is the best way to get people to sign up," Wilsterman said.
Also last week, XM Satellite Radio announced a joint marketing agreement with DirecTV Inc. to drive subscriber growth for the national music service.
DirecTV and parent Hughes Electronics Corp. hold a 10 percent stake in the company.
XM executive vice president of sales and marketing Steve Cook said that DirecTV's direct-broadcast satellite customers are a fertile target for satellite radio since they already appreciate the benefits of satellite-delivered entertainment, including digital quality, a national reach and a wide variety of available programming.
"It seemed like a natural for us to want to talk to DirecTV's satellite customers," Cook said.
Although the companies have not yet ironed out the specifics of the joint promotion, Cook expects the offer to be communicated to DirecTV subscribers through direct mail and broadcast messages within the next several months.
"We expect to have an ongoing relationship with DirecTV," Cook added. He said XM has not yet had discussions with EchoStar Communications Corp. about targeting its DBS customers, and would wait to see how the proposed merger between EchoStar and Hughes plays out.
Since its national consumer launch, XM has advertised the service using traditional media, including television, radio and print ads, he said. XM also provides co-op advertising support to national retailers such as Circuit City Stores and Best Buy. Cook did not disclose the company's marketing budget.
XM EYES 350K
XM has projected it will have at least 350,000 subscribers by the end of this year.
Wilsterman said Sirius does not publicly disclose its subscriber projections.
Cook was not concerned that Sirius would slow XM's subscriber growth. "We think this category is plenty big enough for two players," he said. "It will actually help the category to have two companies promoting satellite radio."
Some analysts have predicted the satellite radio market could grow to 20 million subscribers within five years.
The market for consumers underserved by local radio broadcasts is significant. According to Wilsterman, 45 million Americans live in a market with five or fewer radio stations.
Both XM and Sirius recently joined the Satellite Broadcasting & Communications Association, the organization announced last week.